Closing Bell: Nifty around 19,550, Sensex gains 502 pts; IT index up 4.5%

Taking Stock: Market at fresh record high; Sensex rises 502 pts, Nifty above 19,550

For the week, both the benchmarks added a percent each.... Read More

Spectacular rally in IT stocks following better-than-expected earnings from select frontline technology companies triggered late upsurge, which propelled Sensex to close above the 66k mark. Market seems to be flooded with strong FII inflows, and with US inflation moderating investors are hoping for a rate hike pause by the Federal Reserve later this month. On daily and weekly charts, the Nifty has formed a bullish candle alongwith breakout formation on intraday charts, which supports further uptrend from the current levels.

For the trend following traders now, 19450 would be the trend decider level and could move up till 19800. Below 19450, we could expect a one quick correction till 19400-19300.

For Bank Nifty, the 20 day SMA (Simple Moving Average) or 44500 would be the trend decider level. Above the same, the index could retest the level of 45250-45600. On the other side, below 44500 the Bank Nifty could slip till the 50-day SMA or 44000.

Markets ended the final session on a strong note and gained nearly a percent. After the initial uptick, Nifty traded muted in the middle but a sharp surge in the last half an hour completely changed the tone. Consequently, Nifty settled at a new high i.e. 19,564.50 levels. Most sectors ended higher wherein IT pack was the highlight, followed by metal and realty pack. The broader indices were also in sync and gained in the range of 1.2%-1.5%.

It is a firm close but we need sustainability above 19550 in Nifty for continuation of the up move. The prevailing buoyancy in global markets combined with rotational buying across sectors is favoring the same. We thus reiterate our positive view and suggest focusing on identifying quality stocks across sectors.

Both Nifty and Sensex gained around 0.8% in the past week. Mid-cap and small-cap indices outperformed the large-cap index. Macro sentiments remained volatile as frailties in European and US banks were under focus. Indian equity markets remained concerned slowdown, higher interest rates and valuation even as inflation continued its downward trajectory both globally and domestically.

Major sectors had a positive session in week-on week basis with Metals, Autos and Capital goods gaining the most. Within the Nifty Index, Infosys (+6.5%), Tech Mahindra (+6.3%) and Hindalco (+5.2%) gained the most, while Power Grid (-6.1%), United Phosphorus (-3.9%) and NTPC (-3.8%) lost the most.

FPIs were net buyers, while DIIs were net sellers in the same period. On the economy front, US June CPI print came in lower than expected at 3%, while the Indian CPI print came in higher than expected at 4.8%.

In International news, In United States, the yield on the benchmark 10-year Treasury note rose 3 basis points to 3.7890%, while the 2-year yield climbed 5 basis points to 4.6640%. June producer price index in US was reported weaker-than-expected monthly rise of 0.1% on both the headline and core metrics. That followed Wednesday’s consumer price index, which came in at an annualized 3% for June, below consensus expectations and its lowest level since March 2021.

In Europe, Germany said there is an urgent need for companies to de-risk from China, while “not pursuing a decoupling” of economies. In Asia, China reported no change in consumer prices for June from a year ago.

The controlled inflation in the US has instilled optimism among investors that a 25-bps rate hike would be adequate to stabilise the US economy. This improved prospect has contributed to the strong buying of Indian IT stocks despite muted Q1 earnings. Furthermore, the broad-based rally in the domestic market was supported by India's consecutive third month decrease in wholesale prices, along with the positive involvement of FIIs.

Indian rupee closed 10 paise lower at 82.17 per dollar versus previous close of 82.07.

Wholesale prices declined further in June with a broad-based moderation across all three major components. This was the steepest contraction (annual) witnessed in about eight years helped by continued easing of energy, chemicals and metals prices. Weak economic data from China is keeping the global commodity prices low, which in turn is supporting moderation in WPI inflation.

The sharp sequential uptick in food prices due to vegetables, milk, pulses and cereals is concerning. Nonetheless, given the higher weightage of energy and manufactured products in the WPI basket, we expect WPI inflation to remain in contractionary zone in the first half of FY24. Contraction in WPI index is likely to have a moderating impact on CPI inflation with a lag.

: Benchmark indices ended higher on July 14 with Nifty around 19,600 amid buying across the sectors.

At close, the Sensex was up 502.01 points or 0.77% at 66,060.90, and the Nifty was up 150.70 points or 0.78% at 19,564.50. About 2158 shares advanced, 1161 shares declined, and 142 shares unchanged.

Biggest gainers on the Nifty were TCS, Infosys, Tech Mahindra, LTIMindtree and HCL Technologies, while losers included HDFC Life, M&M, Power Grid Corporation, Titan Company and Dr Reddy’s Laboratories.

BSE midcap and smallcap indices added 1 percent each.

All the sectoral indices ended in the green with Information Technology index up over 4 percent, metal and realty indices up 1 percent each.

-Buy rating, target raised to Rs 1,350 per share
-See more upside as it transforms from auto NBFC to a diversified NBFC
-NIMs are likely bottoming out
-Mix shift could lift NIMs with upside risk from potential rate cuts

Indian Rupee traded with a slight negative bias. Rupee gained in the opening trades on the overnight decline in the US Dollar and fall in US treasury yields. Positive domestic equity markets also supported the domestic currency. However, Rupee declined in the latter half of the day on a surge in crude oil prices, and profit booking at higher levels.

US Dollar fell to a fresh 15-month low and breach the 100 level as faster than expected slowdown in inflation bolstered expectations of just one more rate hike by the US Federal Reserve.

We expect Rupee to trade with a slight positive bias on account of the rise in risk appetite in global markets and extended weakness in the US Dollar. However, the surge in crude oil prices may cap a sharp upside. Market participants may remain cautious ahead of India’s trade deficit and US Michigan consumer sentiment data. We expect the USDINR spot to trade between 81.60 to 82.50 in the near term.

-Neutral call, target at Rs 375 per share
-Growth continues to be affected by low discretionary spends
-Weakness in growth to continue in near term
-Discretionary demand remains weak, affecting consulting portfolio
-Q2 guidance shows weakness to persist
-Margin improvement unlikely in FY24

-Hold call, target at Rs 140 per share
-Biggest surprise is faster-than-expected normalisation in its NIM
-Expect NIM to improve from Q2 as pace of CoF repricing moderates
-Estimate NIM to be in the range of 3.15-3.25%
-Expect investments made in franchise to yield results gradually

We are bullish on Crude oil and the rally picked up in last two weeks will likely continue as fundamentals are shifting fast due to broader supply concerns over disruptions in Libya and Nigeria and hopes of higher U.S. crude demand amid cooling inflation. The outages in African countries could be amounted to wiping of 300kbpd-400kbpd, which could tighten the market after OPEC+ are already squeezing the supplies by 5% of global supplies. Meanwhile OPEC continues to remain bullish on the global oil demand as it sees 2024 demand rise by 2.2%.

On the macro front, US economy is gaining traction with inflation gradually drifting towards Fed’s comfort area, which has raised the bets for ending of interest rates hike cycle in US. While the China’s crude oil imports rose 45.3% in June YoY, is also supporting the bullish momentum.

We expect WTI to soon be trading above $80 will be supported by Asian demand.